AMAR AMBIENCE SAHKARI GRUHRACHNA SANSTHA MARYADIT,PUNE vs. ITO WARD 7(1), PUNE

This assessee‟s appeal for A.Y. 2014-15 arises against the CIT(A)-5, Pune‟s order dated 25-09-2019 passed in case No. PN/CIT(A)-5/ITO Ward 7(1) 10545/2016-17 involving proceedings u/s 143(3) of the Income-tax Act, 1961, in short “the Act”.

Heard both the parties. Case file perused.

2. The ld. CIT(A) erred in law and on facts in not appreciating that the interest of Rs. 31,65,456/- on deposits with nationalised banks, are covered under the concept of “mutuality” and hence not taxable. 3. The ld. CIT(A) ought to have appreciated that the majority of interest received from nationalised banks was generated out of the fixed deposits created from the members‟ contribution of one-time maintenance deposits; and as such, was utilised towards the maintenance and other expenses for the benefit of members. On logical analogy, the same ought to have been reduced from overall maintenance expenses, being a cost mitigation exercise.

Amar Ambience Sah. Griha A,Y. 2014-15 4. Without prejudice to the above ground No. 2 and 3 above, the ld. CIT(A) erred in law and on facts in not granting the benefit of deduction of maintenance expenses against the interest income on a proportionate basis. 5. The appellant craves leave to add/modify/delete/amend all/any of the grounds of appeal

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3. Mr. Phadke submitted at the outset that hon‟ble apex court in Bangalore Club Ltd. Vs. CIT (2013) 350 ITR 509 (SC) has settled the law that such interest income derived from deposits made in nationalised banks/non- members is not entitled for “mutuality”. His only case is once both the learned lower authorities have assessed the impugned interest income of Rs.31,65,456/- under the residuary head of income from „other sources‟, they ought to have granted deduction of the corresponding expenditure wholly and exclusively incurred for the purposes of deriving the same u/s 57(iii) of the Act.

4. Mr. Jasnani strongly supported the impugned disallowance on facts as well as law.

5. I have given my thoughtful consideration to the foregoing rival contentions and find prima facie merit in the assessee‟s stand that learned lower authorities have not considered the corresponding expenditure u/s 57(iii) of the Act. The facts also remains that it was incumbent on the assessee‟s part only to file all the relevant details of the said expenditure. Faced with this situation, I deem it appropriate to restore the instant issue back to the Assessing Officer for his fresh computation subject to the condition that it shall be the assessee‟s bounden duty only to provide all necessary details u/s 57(iii) of the Act within three effective hearings as per law. Ordered accordingly.

6. This assessee‟s appeal is partly allowed for statistical purposes in above terms. Order pronounced in the open Court on this 11th August 2022.

Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Pune; Dated, this 11th day of August 2022 Ankam

Amar Ambience Sah. Griha A,Y. 2014-15